Roadtrip through ECJ Cases – Focus on ”Exemption – Financial transactions – deposit and current accounts, payments, transfers, debts, cheques and other negotiable instruments” (Art. 135(1)(d))

Last update: August 2, 2025

Why It Matters

1. VAT Exemption for Financial Services
- Ensures that core banking and payment services are exempt from VAT, reducing administrative burdens and costs for consumers.
- Applies to services like money transfers, account management, and cheque processing.
2. Strict Interpretation Required
- The ECJ has consistently ruled that exemptions under Article 135 must be interpreted narrowly, as they are exceptions to the general VAT rule.
- Only services that fulfill a specific financial function (e.g., transferring funds) qualify.
3. Impact on Cross-Border and Digital Finance
- Vital for determining VAT treatment of digital payment platforms, fintech services, and non-EU customer transactions.
- Often central in disputes over whether a service is exempt or taxable, especially in cases involving intermediaries or bundled services.

Relevant article in the EU VAT Directive 2006/112/EC

Article 135(1)(d) of the EU VAT Directive 2006/112/EC

Article 135
1. Member States shall exempt the following transactions:
(d) transactions, including negotiation, concerning deposit and current accounts, payments, transfers, debts, cheques and other negotiable instruments, but excluding debt collection;

Article in the Sixth VAT Directive: 13(B)(d)(3)

ECJ Cases Decided